Updated at 7:30 a.m. on November 29.
After cap-and-trade legislation died this summer and with a renewable electricity standard facing a similar fate, clean energy advocates are lobbying Congress on a last-ditch hope to keep their industries afloat: tax incentives.
A handful of key financial incentives or related deadlines expire at the end of this year. They amount to roughly $7 billion ($5 billion of which goes to ethanol and the rest to renewable electricity sources, mainly solar and wind power). Congress is expected to vote on some type of omnibus tax package during the lame-duck session, but it remains unclear what tax extensions will make it into an overall bill.
“If the RES [renewable energy standard] doesn’t pass, and that’s a long-shot right now, and clearly we’re not going to have a price on carbon for a number of years, we’re left with tax policy as the only federal policy of any significance to promote renewable electricity generation,” said Richard Glick, director of government affairs for Iberdrola Renewables, the second-largest wind developer in the United States.
Advocates for renewable energy find themselves in an uncomfortable position fighting alongside ethanol proponents to extend tax credits. The extension of the 45 cents per-gallon ethanol tax credit has always been the No. 1 issue for corn-based ethanol backers. But renewable energy proponents had focused most of their lobbying on bigger targets, namely a renewable energy standard and policy that prices carbon emissions.
“It’s never easy to get tax policy to go your way,” Dan Adamson, the Solar Energy Industries Association’s top lobbyist, told National Journal last week. “But it is true that the politics of tax policy have not changed the way the politics of climate and the RES have changed.”
Rewind two years to when President Obama was taking office alongside a Democratic-controlled Congress, and the prospects for comprehensive climate legislation, including a RES, never seemed brighter. Many renewable energy proponents, including Adamson, did not predict they would be in the position they are now: fighting tooth and nail for tax policy they had deemed secondary to an RES and cap-and-trade bill.
“I’ve been in town for a long time, and sometimes you’re up and sometimes you’re down,” said Adamson, who prior to joining SEIA in May has worked for the Federal Energy Regulatory Commission, Energy Department and nearly a decade as a Hill aide. “But I did think the climate issue was more viable politically than it turned out to be.”
Renewable energy advocates have conceded that the renewable electricity standard sponsored by Energy and Natural Resources Chairman Jeff Bingaman of New Mexico and retiring Republican Sen. Sam Brownback of Kansas, almost certainly won’t pass this Congress. So they are focusing on a Treasury Grant Program, whose construction deadline for renewable energy projects expires at the end of this year.
“It’s our strong view that if there is some type of lame-duck deal on taxes, that the prospects are very good that extension of the Treasury Grant Program will be in that package, and we’re working very hard and very aggressively to that end,” Adamson said last week. “(Two weeks ago) we had 10 solar CEOs in town lobbying Congress and the administration.”
The grant program, created as part of last year's stimulus, gives grants to renewable energy developers in lieu of tax credits that were rendered practically useless following the 2008 economic collapse when large investment firms that had provided the tax equity for the credits lost their taxable incomes.
“Tax equity markets have not been restored. There are not a lot of companies we can partner with that have taxable incomes,” Glick said. “If we can’t get a project started by the end of this year, we’re out of luck. That’s why all renewable energies are working together to try to extend the construction deadline.”
Earlier this month the trade groups representing the wind, solar, geothermal and biomass sectors sent a letter to congressional leadership asking for that extension, as did 22 environmental groups including the Sierra Club and Natural Resources Defense Council in another letter Friday to Senate leadership. They all say that the program has created tens of thousands of jobs, and if the construction deadline is not extended, nascent renewable industries will grind to a halt.
This article appears in the November 29, 2010 edition of National Journal Daily PM Update.